Deal Journal: PetroChina Needs More Disciplined M&A Strategy: Nomura

Dec 17, 2012 8:37 am ET

By Isabella Steger

Bloomberg News

Two recent natural gas deals in Canada and Australia by PetroChina Co. are getting the thumbs down from Nomura analysts.

Last week, PetroChina announced it would acquire 49.9% of Encana Corp.’s Duvernay shale gas project for $2.2 billion. It also agreed to buy BHP Billiton Ltd.’s stake in the planned Browse gas-export project in Western Australia for $1.63 billion in cash.

Nomura wrote in a note that though the two deals are insignificant in size compared to PetroChina’s size, they nonetheless highlight the need for the state-backed oil company to take a “more disciplined approach” in its overseas acquisition strategy.

In the Canada deal, Nomura believes PetroChina overpaid given the long-term collapse in gas prices from $8 per million metric British thermal units in 2009/2010 to $5 mmbtu currently.

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